Industrial development in the lakeshore area is keeping pace with the Grand Rapids market and to some degree surpassing it. Strong values and a handful of large expansions are driving the market in Muskegon County. In Holland and Ottawa County, the market is struggling to keep up with demand for moderately sized users, with some development officials suggesting a shortage of quality facilities smaller than 60,000 square feet.

Robert Horn, vice president and industrial team leader for CB Richard Ellis Grand Rapids, cited vacancy in the Holland area at 8.5 percent, a third better than the 12 percent his company is currently tracking in the Grand Rapids area.

Regularly published reports for the West Michigan industrial market from CB Richard Ellis and Grubb & Ellis do not indicate separate data for the Holland or Muskegon markets. The annual Grubb & Ellis market forecast does make separate projections for those markets, and at the halfway point of the year, its prediction that smaller Holland companies will enter an expansion cycle has come true.

“What we see happening is that locally owned, smaller companies are doing well,” said Tom Postma, vice president of Grubb & Ellis|Focus Properties in Holland. “They seem to be getting confidence back and have a need for short-term space and new buildings.”

Postma reported strong interest for properties of 5,000 to 50,000 square feet, extending the range of 10,000 to 30,000 square feet projected earlier in the year. Most of these are conservative expansions and additions, many on short-term leases, Postma said, speculating that firms are not willing to commit to space not immediately necessitated by growth.

Randy Thelen, president of Holland area economic development group Lakeshore Advantage, was decidedly optimistic for the smaller firms.

“While we have a couple of major facilities driving up vacancy, there has been strong demand for smaller buildings,” he said. “We’ve seen new companies absorb buildings of that size fairly quickly.”

Among others, Jireh Metal Products recently added a new plant near I-96. Gateway Technologies picked up a 50,000-square-foot facility. Billco Products expanded into the former Kandu Industries building in Holland.

Thelen suggested there may even be opportunity for new construction in that segment in the near future. Several of these upstart companies have been occupying space in larger buildings that have been split up for mostly temporary uses, including the former Cris-Craft, LifeSavers and Batts plants.

“These companies are getting to the point where they want their own building, their own sign, and there aren’t many options in that 20,000- to 60,000-square-foot building area,” Thelen said.

The Grubb & Ellis forecast suggested that speculative development of this size could appear in the Holland area in the next year.

With Tiara Yachts, Gentex Corp. and Haworth Inc. all wrapping up massive expansion projects, the larger company segment is seeing some positive activity in Holland. That is easily overshadowed, however, by numerous plant closures. Far from unique in West Michigan, large reuse opportunities are clogging the Holland market: Molly Corp., ConAgra Foods, Hart & Cooley, Pfizer, Perrigo and others.

Postma is representing a 200,000-square-foot Sligh Furniture plant and just listed a 140,000-square foot former Perrigo manufacturing facility near the Tulip City Airport at 1761 Airport Court. Until recently, he represented the former LifeSavers plant at 635-638 E. 48th St. in Holland. Horn, CB Richard Ellis vice president, is the current listing agent for the nearly 400,000-square-foot property, which has been largely vacant since 2003. A $10.8 million tax credit package in 2004 failed to attract many permanent tenants, with the building currently only 40 percent occupied. Fusion Properties, the Ada group that owns the property, is hoping that a $2 million renovation will draw new tenants upon its completion in September.

“The owners are putting an investment into the building before they have a major tenant,” Horn said. “They’re showing their commitment to the marketplace. We’re getting all the old LifeSavers stuff out of there and getting it cleaned up.”

There have been some notable reuse plans taking shape this year, such as the renovation of the Hart & Cooley factory and the Pfizer facility into mixed use and research facilities, respectively. Stu Kingma, industrial advisor and vice president of The Wisinski Group, reported that he is currently in negotiations to sell a Holland property in excess of 200,000 square feet.

The biggest industrial news on the lakeshore today, Kingma said, is the recent announcement that German firm Wacker Construction Equipment AG will relocate the Spring Lake firm it acquired last year, Ground Heaters, from its current 40,000-square-foot facility to an initially 150,000-square-foot — but potentially 450,000-square-foot — facility on 34 acres on Sternberg Road in Norton Shores near U.S. 31.

Not far from there, Robert Grooters Development is weighing a potential speculative project on 17 acres adjacent to its nearly full Norton Shores industrial park at 1269 E. Mt. Garfield Road.

“In the last six to eight weeks, a number of the different companies we’ve been working with have decided that it’s time for them to pull the trigger,” said Amanda Campbell, a Grooters leasing agent specializing in the lakeshore market. “It’s quite a happy surprise. A lot of these companies were kind of in a holding pattern, and now they’re looking for more space.”

Steve Wilson, a commercial real estate advisor in the Grand Haven office of Grubb & Ellis|Paramount Commerce, attributed a surge of activity in his market to the availability of facilities and some depressed prices. The latest: The 90,000-square-foot Acemco Metal Stamping building on Comstock Street in Grand Haven, acquired this month by Asimco spin-off AGC.

“We had a number of large vacant facilities in the 80,000 plus range that were on the market for three, four years,” Wilson said. “Now we’re seeing a lot of good activity and some strong absorption on the low-end of the spectrum.”

The large number of plant closures in the tri-cities area forced prices on many facilities below $15 per square foot, with some modern, high-bay facilities available for $10 per square foot or less. Building a comparable facility could cost four times that much, Wilson noted, and some of these buildings are even located in the Muskegon and Muskegon Heights Renaissance Zones.

“Even though some of these buildings might need a little work, they’re going to get a real serious look,” Wilson said. “When you can buy it for 10 bucks, that’s hard to look past — Muskegon is going to have a renewed focus, especially for somebody that needs a bigger footprint.”

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